PSA’s new DS brand to grow strategically in bid to take on Audi et al

PSA Peugeot Citroen will pitch its DS brand at established German rivals, notably Audi, but the fledgling French marque’s new global chief has admitted it could take years before it has an impact in the booming premium car segment.

Now officially its own brand under the wider PSA umbrella that includes Citroen and Peugeot, DS will be the group’s most premium offering and pushed further in the Chinese market ahead of a model range and market expansion.

Discussing the plans for DS with GoAuto at the Paris motor show, DS CEO Yves Bonnefont said the growth strategy was a long-term investment and unlikely to bear fruit in the short term.

“We are going on a journey of 15 years,” he said. “I am not working for next month or even for next year. We have to have some ambition and see where we want to put the goal.

“And we have decided to create a full-fledged global premium brand. We want to be a competitor in that field and we will do what it takes to get there. We know it’s going to take time and investments but that is the way we are headed.

“We will really work hard to be there in the mid-term.” The plan involves doubling the model range from three to six models and launching in new markets with high-end fashion house-style DS stores in cities that have been strategically chosen across the globe, including Australia.

While keen to boost the number of offerings to potential customers, Mr Bonnefont said rapid expansion and filling niches between models in a similar manner to its German counterparts was not on the agenda.

“We don’t want to do that. We believe that with between six and seven models, we will be able to cover the core segments of the market globally. So this is for the foreseeable future, this is the model range we would like to develop.” Under the Citroen banner, DS line models have sold 500,000 units since the DS3 launched in 2010, and the French car-maker says that 300,000 of those were conquest sales from other non-PSA brands.

The company is aggressively pushing for sales growth in China, and to facilitate this it built a factory in Shenzhen where it builds the DS5 under a joint venture with Changan.

While there is a strong focus on China, the world’s biggest auto market has so far accounted for just 16,000 DS sales. In contrast, 85 per cent of sales have come from the European market, where customers have established ties with DS, albeit as part of the Citroen brand.

Mr Bonnefont highlighted Chinese-market models such as the DS 5LS sedan and the DS 6WR as examples of its commitment to the region, and added that the company was happy with sales volume so far.

“We have launched three cars in 12 months and we start to see the benefit of that with the brand starting to exist in China. With now 16,000 customers in China, which is a good start, we are happy with that.”

Confirming the Citroen/DS split with British publication AutoCar last month, PSA chairman Carlos Tavares said DS could be a rival for Audi in the future, but it would need to differentiate itself to succeed.

“DS can be an Audi rival by 2020. The products in the pipeline are extremely exciting but we are not just going into premium as we’re not going to be fighting the Germans with the same weapons,” he told the publication.

Mr Bonnefont declined to comment on short- and medium-term global sales targets, but added that the focus for DS was about fostering the brand and not chasing sales.

“As a premium brand we don’t want to govern ourselves on volumes,” he said.

“For many, many years in the automotive industry it has been an issue to govern companies on volume, because when you do that you make a lot of mistakes ...

you tend to be over-focused on the short term versus building the image of the brand.

“We don’t want to get into that trap and I am extremely careful not to manage the brand on volume.”

Mr Bonnefont said that while the premium market makes up about 10 to 15 per cent of total global car sales, it would be a “long journey” before DS made up 10 to 15 per cent of PSA’s overall yearly total.

The French- and Chinese-owned corporation recorded a total of 2,819,000 sales worldwide in 2013, which was a 4.9 per cent drop compared with the same period in 2012.

PSA is on track to improve on that result and crack the three-million mark this year after recording 1,541,083 worldwide sales in the first half.